Regulation  

FCA opens 70 regulatory investigations since inception

The Financial Conduct Authority has opened at least 70 investigations into firms and individuals since it came into power in April 2013, compared to just 49 investigations opened by the Financial Services Authority in the preceding year.

According to data obtained by international law firm Pinsent Masons, on average the FCA’s enforcement division opened more than six new investigations a month in the period from April 2013 to February 2014 compared to the FSA’s average of slightly over four from April 2012 to March 2013.

Pinsent Masons says if that rate continues it would mean the FCA will be on track to launch at least 50 per cent more investigations in its first year than its predecessor.

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The increase in investigations also coincides with a 38 per cent increase in whistle blowing during the FCA’s first six months of operation, the law firm said.

Among the investigations launched will be the ongoing probe into foreign exchanges.

Earlier this month the Bank of England suspended one of its employees in connection with an investigation into whether the bank helped traders manipulate foreign exchange rates, or were aware of the practice.

Michael Ruck, a financial services litigation expert at Pinsent Masons and former FCA lawyer, said: “The new watchdog is certainly baring its teeth, but we do not yet know whether its bark is worse than its bite. The real test will be when we see how many of these investigations result in penalties, sanctions or prosecutions and, in turn, whether any of those lead to convictions.

“The FCA’s Business Plan and Risk outlook for 2013/14 highlighted that addressing misconduct and taking action on market abuse would be among its key priorities, so the focus on investigations in this area is perhaps not surprising. What is striking, however, is the sheer volume at which investigations are being launched across all aspects of the regulatory regime.

“Regulated firms should ensure they fully understand the FCA’s current priorities and the enforcement agenda. Firms and individuals should beware of the watchdog. ”